Monday, 13 May 2013

Nigeria: Airtel Vs. Prima Garnet - Why the Fight Lingers

FOR the past four months or so, the Nigerian advertising industry has been regaled by stories of a face-off between one of the leading Ad Agencies in the country, Prima Garnet, and her erstwhile affiliate, Ogilvy & Mather Africa, over the marketing communications business at Airtel Nigeria. It's moved from the boardroom to the media and now the courts. Solomon Ibeawuchi, who has been following the story, puts the issues in perspective in this report.

IN the beginning: Following he revolution that swept through the advertising industry in the 80s and 90s, it was apparent that globalization and its effects will culminate in international affiliations in the succeeding years.

If anybody predicted such, it was, therefore, a self-fulfilling prophecy which saw the big agencies like Insight, STB, Rosabel, SO&U, Prima Garnet, etc., getting affiliated to some internationally acclaimed agencies. Insight joined the Grey family; Rosabel joined Leo Burnet; SO&U affiliated with Saatchi and Saatchi; STB joined McCann Ericsson and Prima Garnet married Ogilvy & Mather. These came, expectedly, with lucrative accounts and, of course, skills exchange, training and global recognition. Indeed, someone described Nigerian advertising agencies as going "glocal".
As with most relationships, these affiliations are mostly guided by legal agreements, which spelt out the terms and conditions binding the parties. And so it was between the Lolu Akinwunmi-led Prima Garnet and Ogilvy & Mather.

Between Ogilvy and Prima Garnet: Since 1997, when Prima Garnet was appointed the Ogilvy & Mather affiliate in Nigeria, Ikeja-based agency has had a robust relationship with their partners with some GSK brand as major accounts thrown into the mix.

As a matter of fact, the affiliation did metamorphose into an equity-based relationship following the acquisition of 10 per cent and later 12.5 per cent shares in Prima Garnet by O&M. In 2012, the Airtel Nigeria account was added to Prima Garnet's basket following the selection of O&M by Bharti-Airtel to handle all Airtel's advertising in its 17 or so African operations. A formal agreement was inked on February 22, 2012.

Arguably a very lucrative account, the Airtel business brought additional fortune and fame for the highflying Ikeja-based advertising agency with a billing of over N3bn during the period, some industry watchers say. Information at my disposal, however, suggests that the relationship started souring mid last year following frequent complaints by client (Airtel Nigeria) about quality and long turnaround time for marketing briefs.

There were several exchanges apparently which didn't result in remarkable improvements and Airtel Nigeria started grumbling over decreasing marketing visibility and in the hugely competitive telecommunications market. It was a matter of time before the camel's back was literally broken.

Enter Scanad: Last year, a new agency, Scanad, emerged on the Nigerian advertising firmament. Led by one of the industry's young turks, Rufai Ladipo, formerly of STB-MCann, Scanad Nigeria Limited is a subsidiary of Scangroup, which claims to be Africa's leading marketing services group partly owned by WPP, the world's largest communications service group with 3,000 offices in 110 countries. Scangroup, a sister company to O&M, has offices in Kenya, Uganda, Tanzania, and Ghana and buys media in Ethiopia, Rwanda, Burundi, Zambia, Zimbabwe, Malawi, Mozambique, Angola, Gabon, DRC and Mauritius.

Recently, a top Prima Garnett chief, made known the following: "some six years ago, Ogilvy informed us they were interested in increasing their equity within Prima Garnet from 12.5 per cent and we offered to sell between 25 and 30 per cent."

But while the negotiations were on, Ogilvy's parent company, WPP bought into Scanadgroup, the owners of Scanad through Ogilvy and Scangroup, in turn, bought 51 per cent of Ogilvy Africa in a share swap, which effectively made Bharat Thakrar the simultaneous Chairman of both Scangroup and Ogilvy.

He explained that as soon as the deal between Ogilvy and Scangroup was consummated, Bharat Thakrar demanded for 51 per cent of the Prima Garnet group, which didn't go down well with the board of directors of Prima Garnet. To cut the long story short, Prima Garnet's board's refusal to play ball led to a threat by Ogilvy to withdraw its affiliation from Prima Garnet. Well, Ogilvy was not immediately available to confirm or deny this claim, but then many events started unfolding thereafter - one of which is the setting up of Scanad in Nigeria.

Scanad: To be or not to be
Because the matter is sub judice, suffice it to say that Prima Garnet went to court not only to challenge the setting up of Scanad in Nigeria allegedly in breach of the affiliation agreement but also the termination by Ogilvy of the affiliation agreement.

Be that as it may, Ogilvy says it fired Prima Garnet due to its alleged poor management of the Airtel account. In a letter dated December 17, 2012, Ogilvy Africa, citing Clause 13.1 of the affiliation agreement terminated the relationship between them and Prima Garnet. The clause reads inter alia: The Airtel Account: A livid Prima Garnet believes that Scanad was set up to "snatch" the Airtel account from them, but the fight between them and their affiliate, Ogilvy has not helped matters.

Because on February 9, in a bid to distance itself from the imbroglio and carry on with its marketing communications business, Airtel Africa terminated its agreement with Ogilvy Africa with specific regards to its business in Nigeria.

It was evident that Airtel Nigeria was bearing vicarious liability for the business gone sour between Prima Garnet and their erstwhile chum. So, Airtel made to extricate its name from the fracas and, more importantly, rescue its flagging presence in the market place due to low visibility occasioned by the "difficult relationship."

This action displeased Mr. Akinwunmi who, also is the Chairman of the Advertising Practitioners Council of Nigeria (APCON), and Prima Garnet then joined Airtel in its legal action against Ogilvy and Scanad. The management of Prima Garnet obviously believes that Airtel is indulging Ogilvy and surreptitiously supporting the establishment of Scanad.

Establishment of Scanad: Airtel Nigeria, however, had seemingly sought to move on with its life, because it didn't have any legal agreement with Prima Garnet per se.

An attempt by Airtel to conduct a pitch to select another advertising agency for its business was aborted by Prima Garnet, which went to the courts to seek an injunction to truncate the process. Airtel went ahead to appoint STB-MCann as its agency. Again, Prima Garnet is challenging this.

Meanwhile, according to the affiliation agreement Prima Garnet has with Ogilvy, there are no exclusivity rights.

Section 3.1 states inter alia: "OMA (Ogilvy & Mather) agrees to introduce to the Affiliate those Ogilvy Clients that indicate an interest in having local agency representation in the Territory, although it is understood and agreed that such referred Ogilvy Clients may, at their absolute discretion, choose not to engage the Affiliate and/or to engage another agency within the Territory."

The APCON Connection
Given the above, industry watchers are now wondering why Prima Garnet joined Airtel Nigeria in its fight with Ogilvy to the extent that APCON now refuses any approval requests from Airtel. Airtel had introduced STB-MCann as its media buying agency to APCON, but APCON, citing a court order, refuses to vet Airtel advertisements.

Airtel Nigeria, in a letter dated April 22, 2013, to APCON, protested the refusal to vet and approve its ads and sought to explain the facts of the matter. A reply from APCON dated April 26 and signed by Uforo Inyang-Opara, acknowledged the letter, which it said it had forwarded to "the Advertising Standards Panel (ASP), the statutory body whose mandate is to ensure compliance with and maintenance of advertising standards and particularly the provisions of the APCON Code of Advertising Practice through the grant of Certificate of Approval for all advertising materials to be exposed in the media". The letter went on to state that Airtel may be required to appear before the panel in due course.

It was, therefore, a totally shocked Airtel that read in the media that the ASP had met and decided to clamp down on Airtel's adverts until further notice. Industry watchers are unable to state if the ASP has held the April 26 meeting, considering that the news broke in the media on Monday, May 6. Indeed, Airtel management claims it received no summons from ASP to appear, as the letter had hinted.

Conflict of Interests
There are subtle hints that Lolu Akinwunmi, who is both CEO of Prima Garnet and Chairman of APCON is conflicted. As the chair of APCON, Mr. Akinwunmi wields considerable influence there. Besides, it has been alleged that one of the agencies, 141 Worldwide, in which Mr. Akinwunmi supposedly has an interest, works for Etisalat, which is in direct competition with Airtel Nigeria.
The outcome of the court actions in the coming weeks and perhaps the effort of the Minister of Information, Labaran Maku, who is believed to have been briefed on the matter (going by copies of letters by Airtel Nigeria which I sighted), may determine how long or how short this brouhaha will last. And indeed how long more Airtel Nigeria's Marketing Communications will suffer from this rather litigious affair.